Abstract

Nodal price separations in Day-Ahead (DA) market caused by transmission congestion create congestion charges/surplus that are reallocated to the market participants through the financial transmission right (FTR) auction. From a market participant's viewpoint, these two markets are interrelated because the revenue of market participant in FTR auction is determined based on the day-ahead locational marginal prices. Furthermore, virtual transactions which are designed to improve price convergence between the day-ahead and real-time markets can directly impact day-ahead prices. This impact through virtual transactions may be utilized by a market participant to increase its FTR value and improve its overall strategy in participating in both FTR auction and day-ahead market. To this end, this paper is the first attempt to reveal this tactic in literature and proposes an offer strategy framework for a price-maker generating company participating in both FTR auction and day-ahead market with the consideration of virtual bidding. First, the possibility of FTR value manipulation is conceptually demonstrated by placing virtual bids in the day-ahead market. Second, a two-stage bi-level offering strategy model is formulated for strategic GenCos, which is further converted to a single-level optimization problem by using Karush-Kuhn-Tucker conditions and strong duality theory. Numerical tests on a 5-bus system and IEEE reliability test system (RTS) demonstrate the effectiveness and applicability of the proposed approach.

Department(s)

Electrical and Computer Engineering

Keywords and Phrases

Bidding; day-ahead market; FTR auction; manipulation; offering strategy; virtual bidding

International Standard Serial Number (ISSN)

1558-0679; 0885-8950

Document Type

Article - Journal

Document Version

Citation

File Type

text

Language(s)

English

Rights

© 2023 Institute of Electrical and Electronics Engineers, All rights reserved.

Publication Date

01 May 2023

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